Natural gas producers frustrated by Ottawa’s delay to TC Energy’s biggest pipeline expansion
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What are producers to do? I guess we shouldn’t go drill
Darren Gee, CEO, Peyto Exploration and Development Corp.
Multiple natural gas executives have compared the NGTL system to a puzzle with missing pieces, and those missing pieces make it difficult for traders and producers to determine how much gas to drill, buy and sell next summer.
“There’s a reason they needed the entire system to expand and they really needed to complete that in order to prevent disarray in the market,” said Tristan Goodman, president of the Explorers and Producers Association of Canada, which is an industry group representing small- and mid-sized oil and gas companies.
“We’re missing pieces, basically,” he said of the delay to the last piece of TC Energy’s NGTL expansion.
TC Energy had planned to begin construction on a 1.45 billion cubic feet expansion to the NGTL system between Grande Prairie and Rocky Mountain House, Alta., this summer in order to have the expansion up and running in April 2021, but the federal government delayed final approvals for the project on May 19.
In an email to the Financial Post, the pipeline giant said it has now lost the summer construction season and the new in-service date for the expansion is April 2022, which has frustrated Canadian natural gas producers concerned the bottlenecks on the system will lead to the kind of gas price volatility experienced in the summer of 2017, 2018 and much of 2019, when the AECO benchmark would frequently trade in negative territory.
The industry is still waiting on federal government approval for the project, which is now expected on Oct. 19.
